Foreign direct investment of U.S. circulation industry: features, experience and implications

YUAN Pinghong1 JING Linbo2

(1.YUAN Pinghong, Associate Professor at School of International Trade and Economics, Anhui University of Finance and Economics)
(2.JING Linbo, Research Fellow at Institute of Evaluation of China’s Social Sciences, Chinese Academy of Social Sciences)

【Abstract】China can strengthen its economic and trade prowess through expanding foreign direct investment of its circulation industry, which will promote the role of such industry in bridging global production and consumption. China can learn from experience of the developed countries in making foreign direct investment of the circulation industry so that it can improve the quality of its own foreign direct investment in this sector. Drawing from experience of the U.S., China should expand its foreign direct investment in the circulation industry during the 13th Five-year Plan period (2016–2020) and carry out the following tasks: it should make sure the indigenous circulation enterprises can fully dominate the domestic market, which will provide a solid foundation for China’s foreign direct investment in the circulation industry; it should make a national strategy and devise relevant policies to guide the direction of such investment to ensure safety and returns of investment; and it should promote the coordination between the circulation industry and other industries in making such investment to build a global value chain dominated by Chinese enterprises.

【Keywords】 circulation industry; foreign direct investment; investment income; non-store retailer; global value chain;

【DOI】

【Funds】 Project of National Social Science Foundation of China 2015 (5BJY114)

Download this article

    Footnote

    [1]. [1] The circulation industry in this paper includes wholesale and retail industries. [^Back]

    [2]. [2] Zhu, H. & Ye, M. China Business and Market (中国流通经济), (12): 11–18 (2016). [^Back]

    [3]. [3] Ding, N. Journal of Business Economics (商业经济与管理), (1): 13–18 (2015). [^Back]

    [4]. [1] http://www.china.com.cn/cppcc/2017-10/18/content_41752399.htm [2018-01-23] [^Back]

    [5]. [2] From the Bureau of Economic Analysis of the U.S. Department of Commerce, the earliest available data on foreign direct investment of the U.S. circulation industry are those in 1982, and the latest data are those in 2015. [^Back]

    [6]. [3] The United States adopted the Standard Industrial Classification for industrial classification in 1998 and before, and after 1999 it used the North American Industry Classification System for classification, so statistical standards are different. [^Back]

    [7]. [1] At the policy level, the United States published the Framework for Revitalizing American Manufacturing in December 2009, passed the Manufacturing Promotion Act in August 2010, launched the Advanced Manufacturing Partnership and National Strategic Plan for Advanced Manufacturing in June 2011 and February 2012, and published the National Network for Manufacturing Innovation Program in 2013, in an attempt to realize the “re-industrialization” and “return of manufacturing” of the United States. Under the guidance of the policy, the U.S. foreign direct investment shows the characteristics of gradually reducing the proportion of foreign direct investment of manufacturing and circulation industries and gradually increasing the investment of non-bank holding companies. According to the data from the U.S. Department of Commerce, the proportion of foreign direct investment of the U.S. manufacturing industry in the U.S. total foreign direct investment decreased from 22.46% in 2001 to 12.29% in 2015. In contrast, the proportion of foreign direct investment of non-bank holding companies in the U.S. total foreign direct investment increased from 30.76% in 2001 to 51.79% in 2015. That is to say, from 2001 to 2015, the total foreign direct investment of the United States was characterized by a decline in the proportion of foreign direct investment of manufacturing and circulation industries and an increase in the proportion of foreign direct investment of non-bank holding companies. [^Back]

    [8]. [1] According to the data from the U.S. Department of Commerce, the authors calculated and found that the proportion of foreign direct investment of the U.S. circulation industry in the U.S. total foreign direct investment decreased from 9.62% in 2001 to 5.79 % in 2015, and the proportion of income from foreign direct investment of the U.S. circulation industry in the total income from foreign direct investment decreased from 14.04% in 2001 to 6.3% in 2015. From these data, it can be seen that the overall income from foreign direct investment of the U.S. circulation industry is not bad. [^Back]

    [9]. [1] According to the data from the U.S. Department of Commerce, the authors calculated and found that the proportion of foreign direct investment of the U.S. non-bank holding companies in the U.S. total foreign direct investment increased from 30.76% in 2001 to 51.79% in 2015, and the proportion of income from foreign direct investment of non-bank holding companies in the total income from foreign direct investment increased from 37.7% in 2001 to 54.38% in 2015. That is to say, compared with the circulation industry, foreign direct investment of the U.S. non-bank holding company contributes more to the income from the U.S. foreign direct investment. [^Back]

    [10]. [1] The authors calculated according to Top 100 Retailers 2014, http://www.linkshop.com.cn/web/archives/2014/295248.shtml [2017-07-28]. [^Back]

    [11]. [1] Deloitte, “Global Powers of Retailing 2017”, https://www2.deloitte.com/au/en/pages/consumer-industrial-products/articles/global-powers-of-retailing-2017.html [2017-05-07]. [^Back]

    [12]. [1] Deloitte, “Global Powers of Retailing 2017”, https://www2.deloitte.com/au/en/pages/consumer-industrial-products/articles/global-powers-of-retailing-2017.html [2017-05-07]. [^Back]

    [13]. [2] Brand Finance, Most Valuable Global Brands 2017, http://www.china-10.com/news/476060.html [2017-05-07]. [^Back]

    [14]. [1] Wang, Z. (eds.) Non-element Cost & Foreign Direct Investment Flow (美国资本流动:非成本要素与对外直接投资流向分析). Beijing: Social Sciences Academic Press (China), (150) (2011). [^Back]

    [15]. [1] Ministry of Commerce. China has signed investment agreements with more than 130 countries and regions, http://www.ce.cn/ (2016-3-17), http://money.163.com/16/0317/13/BIC6TFEA00253B0H.html [2017-07-28] [^Back]

    [16]. [2] Ministry of Commerce. China has signed bilateral investment agreements with 56 countries along the “Belt and Road.” http://www.cnstock.com/ (2016-5-31), http://finance.sina.com.cn/stock/t/2016-05-31/doc-ifxsqtya6596462.shtml [2017-07-28]. [^Back]

    [17]. [1] As of October 2017, China has officially signed 103 agreements on double tax avoidance, 99 of which have entered into force, signed tax arrangements with Hong Kong and Macao special administrative regions, and signed tax agreements with Taiwan. Data source: State Administration of Taxation. Tax Agreements, http://www.chinatax.gov.cn/n810341/n810770/index.html [2018-01-22] [^Back]

    [18]. [2] Gao, L., Li, W. & Yu, Y. Economic Survey (经济经纬), (6): 72–76 (2013). [^Back]

    [19]. [3] World Trade Organization, “United States Trade in Value Added and Global Value Chains”, https://www.wto.org/english/res_e/statis_e/miwi_e/US_e.pdf [2017-07-28]. [^Back]

    [20]. [1] Sang, B. International Economic Review (国际经济评论), (4): 67–76 (2016). [^Back]

    [21]. [2] Wang, B. International Economic Review (国际经济评论), (1): 63–74 (2013). [^Back]

This Article

ISSN:1007-0974

CN: 11-3799/F

Vol , No. 02, Pages 131-145+8

March 2018

Downloads:0

Share
Article Outline

Abstract

  • 1 General characteristics of foreign direct investment of the U.S. circulation industry
  • 2 Experience of foreign direct investment of the U.S. circulation industry
  • 3 Enlightenment of foreign direct investment of the U.S. circulation industry for China
  • Footnote